our credit score can affect your chances of being accepted for credit, for  loan, credit card, mobile phone contract or mortgage.  

And because of this, it has the potential to significantly impact your life.  

Credit providers ranging from banks to car dealerships, use your score as one of the factors in deciding whether to offer you a loan. It gives them an idea of how successfully you’ve managed your bills and debts in the past.  

The good news is, you can check your score ahead of any credit application. Here’s how you go about it.

What is a credit check?

You carry out a credit check online with one of a several credit reference agencies. These companies store your credit report but they don’t determine the information held within it.

There are three major credit reference agencies – Equifax, Experian and TransUnion (formerly CallCredit). Each uses its own system to calculate your score, so your results will look different with each one.

What factors affect your credit score?

Factors such as your level of outstanding debt, frequency of credit applications, proportion of your credit limits you are using (known as a credit utilisation ratio), and how reliable and timely you are when making repayments, all determine the quality of your credit score.

How is your credit score calculated?

Your score will always be a three-digit number. But what range this number may fall into as well as what constitutes a ‘good’ score will depend on the agency.  Here’s more on how the different major credit reference agencies work.

Equifax: The maximum score at Equifax is 700. Here’s how it breaks down.

Between 420 and 465: Good

Between 380 and 419: Fair

Between 280 and 379: Poor

Equifax offers a 30-day trial, with its service costing £9.95 after that. But if you sign up to credit scoring service, ClearScore, you can get a free Equifax credit report every month.  

Experian: Credit scores at Experian are marked out of a maximum 999. They break down as follows:

Between 881 and 960: Good

Between 721 and 880: Fair

Between 561 and 720: Poor

You can get a free 30-day trial using Experian’s CreditExpert service. After that, it’ll cost you £14.99 per month.  

TransUnion: If you check with TransUnion, your score will be out of 710. Here’s how it breaks down.

628 and above:  Excellent

Between 604 and 627: Good

Between 566 and 603: Fair

Between 551 and 565: Poor  

Alongside your score, Transunion uses a rating from one to five, with one being the worst and five being excellent.  

If you sign up to a free-for-life service called Credit Karma (formerly Noddle), you can get a free TransUnion report.  

However, bear in mind that TransUnion isn’t as widely used by credit providers as Experian or Equifax.  

Why is a good credit score important?

A good credit score means that a lender is more likely to view you as lower risk. This will not only boost your chances of acceptance if you’re hoping to borrow money, but will unlock better deals – such as zero interest credit cards.  

Using a comparison service to find the best credit cards and personal loans will present you with an overview of the market, and the kind of rates you may get.  

Many providers also now offer eligibility checkers which allow you to see the likelihood of being accepted for a particular deal without actually applying for it.  

This approach leaves your credit file free from ‘footprints’ which, in turn, can be a deterrent to other lenders when you apply for credit at a later date.

But if you haven’t checked where your credit score stands, it may be worth doing so before applying for credit – especially big-ticket lending such as a mortgage for your first home.  

However, don’t get hung up on achieving a particular number as a credit score. Whatever your score, this doesn’t guarantee that you’ll be accepted or rejected for a credit application.  

This will depend on a range of other factors too including your personal circumstances, annual income, reasons for taking credit, and even the provider’s own appetite to lend.

Can I check which agency the lender uses?

While a lender is not obliged to disclose the information, it’s worth enquiring which credit reference agency is used by a particular provider to determine the success of your application. The answer could well come back as Experian, as it’s the biggest and most commonly-used credit reference agency.  

However, it’s possible to check all three of your scores with the major agencies above by using CheckMyFile, which offers a free 30-day trial and £14.99 per month thereafter.  

This may provide useful information on your overall financial situation, and where it could be improved.  

How can I improve my credit score?

Some of the quickest and easiest methods of improving your credit score are also the most effective.

For example, ensuring you are on the electoral roll (which means you are registered to vote), correcting any potential errors and removing any financial associations that are no longer relevant (for example, an ex-partner you may have had a mortgage with).

You can do this by contacting the agencies direct.

In the longer term, ensure you make all debt repayments on time and keep within the lower realms of any credit limit. When it comes to credit cards, under 30% of your available limit will help boost your score.

Finally, remember …

Lenders have access to different information on your financial history, depending on which agency they use.  

They also have their own criteria for accepting applications, so even if your score isn’t as good as you’d like, it doesn’t necessarily mean you cannot get credit.  

However, it still stands that the higher your credit score, the more likely you will be accepted for credit which – whether you use it or not – is always a good option to have.

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